Good afternoon, Mr. Chair and members of the committee.
I'm Michael Graydon, chief executive officer of Food, Health and Consumer Products of Canada, the leading voice of Canada's largest manufacturing employers. The food, health and consumer products sector employs more than 350,000 Canadians across businesses of all sizes that manufacture and distribute the safe high-quality products that are at the heart of healthy homes, healthy communities and a healthy Canada.
We transform Canada's agricultural riches into value-added finished goods that feed families here at home and around the world. We work closely with Canadian farmers and are the single largest employer in rural Canada, serving as a critical link between rural and urban communities. We are present in every region across the country, providing good-paying jobs, strengthening communities and adding more than $39.9 billion to the economy each year.
Key initiatives like the national food policy, the agri-food economic strategy table and the food processing industry round table have all recognized the critical importance of the agri-food industry, and in particular the potential for value-added food manufacturing to make Canada a global leader in food production and innovation. Our sector is a necessary engine for jobs, growth and self-reliance.
Today I'll focus on two of the top constraints facing the Canadian food-manufacturing industry: first, a chronic and growing labour shortage that has left one in 10 job vacancies in our sector unfilled; second, unfair practices from grocery retail giants that harm Canadian farmers, grocery suppliers and consumers.
For Canada to be an attractive destination for investment, we must be able to attract and retain workers, yet labour gaps continue to worsen for food manufacturers, with nearly 28,000 job vacancies. Jobs in our sector pay well and should be in demand. Hourly wages for food manufacturers have increased by 16% compared to the previous year, with an average wage of $24 an hour. That's 60% higher than the highest provincial minimum wage. Food manufacturers have also stepped up to invest heavily in keeping workers safe through the COVID-19 crisis, to provide incentives to workers and to increase employee engagement and appreciation incentives.
Despite our efforts, labour challenges persist, and we ask the government to incentivize unemployed Canadians to take these jobs, to continue to help ensure predictable and timely access to workers outside of Canada to fill the domestic labour gap, to provide support and incentives for companies to invest in automation, and to convene a round table with food manufacturers to discuss these labour challenges and work together towards solutions.
If Canada truly prioritizes jobs and growth, it must also urgently correct the second constraint that I'd like to raise today: unfair practices by a handful of powerful grocery retail giants. Just five grocery retailers control more than 80% of Canada's grocery stores and drugstores, creating a significant power imbalance over manufacturers, farmers, suppliers, small retailers and consumers.
Some grocery retail giants have exploited this power to impose unfair and unethical business practices that hurt everyone else who grows, makes, buys or sells food and other essential products. For far too long, some large grocery retailers have used farmers and suppliers as a piggy bank, imposing arbitrary fees, raising costs and paying suppliers less than they are owed, all while charging shoppers more and more.
The consequences are severe. When farmers and suppliers are forced to pay retail giants' bills, they struggle to pay their own and must cut back on innovating new products, investing in new facilities and creating new jobs. Made-in-Canada food becomes more expensive, and our food system weakens. Consumers have fewer, more expensive choices; workers lose job opportunities; and, Canada is already losing investment to more competitive countries.
Now, in the midst of the ongoing pandemic, companies like Loblaw and Walmart have doubled down on this bullying behaviour, forcing suppliers to fund retailers' expansion, all while making record profits. New fees imposed by Walmart and Loblaw alone cost suppliers an estimated $1 billion per year, bringing the total cost of getting and keeping products on store shelves to an estimated $6 billion a year, with no tangible benefit to the suppliers or to consumers.
Canada's grocery giants may control the majority of stores and shelves in the country, but it's time that we all remember there would be nothing to sell without food and other grocery suppliers.
Proven models, such as the U.K.'s groceries supply code of practice, with a dedicated enforcement agency, have shown significant success in restoring balance and fairness to the relationship between grocery retailers and the suppliers, while keeping food-cost inflation low. A recent statutory review confirmed that the U.K. code has improved communication, collaboration and efficiency while maintaining flexibility in the food supply chain. It resulted in clear benefits for all stakeholders. The code's results prove that strong oversight and good governance are good for business and good for consumers.
We are calling on the provinces and territories to lead the way in implementing an enforceable code of conduct, similar to the U.K. model, that holds large grocery retailers accountable for fair treatment of suppliers. We also urge the federal government's leadership to develop a common framework that would be used by provinces and territories to avoid a patchwork approach of various codes of conduct.
It is long past time for governments to take seriously the negative consequences of unfair practices by Canada's grocery giants. Leaders across the supply chain agree that failing to do so will threaten food security in this country, weaken our essential supply chains, hurt consumers and jeopardize Canadian growth, jobs, and the COVID-19 recovery.
I thank you, Mr. Chairman, for your time.